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This paper considers investment problems in real options with non-homogeneous twofactor uncertainty. We derive some analytical properties of the resulting optimal stopping problem and present a finite difference algorithm to approximate the firm's value function and optimal exercise boundary. An important message in our paper is that the frequently applied quasi-analytical approach underestimates the impact of uncertainty. This is caused by the fact that the quasi-analytical solution does not satisfy the partial differential equation that governs the value function. As a result, the quasi-analytical approach may wrongly advise to invest in a substantial part of the state space. [ABSTRACT FROM AUTHOR]

Carbon capture and utilization (CCU) is one of the key technologies that may help to reduce industrial emissions. However, the deployment of CCU is hampered by various barriers, including high levels of technical, policy and market uncertainty. The real options theory (ROT) provides a method to account for these uncertainties and introduce flexibility in the investment decision by allowing decisions to be changed in response to the evolution of uncertainties. ROT is already being applied frequently in the evaluation of renewable energy or carbon capture and storage (CCS) projects, e.g., addressing the uncertainty in the price of CO2. However, ROT has only found a few applications in the CCU literature to date. Therefore, this paper investigates the specific types of uncertainty that arise with the utilization of CO2, identifies the types of real options present in CCU projects and discusses the applied valuation techniques. Research gaps are identified in the CCU literature and recommendations are made to fill these gaps. The investment decision sequence for CCU projects is shown, together with the uncertainties and flexibility options in the CCU projects. This review can support the real options-based evaluations of the investment decisions in CCU projects to allow for flexibility and uncertainty. [ABSTRACT FROM AUTHOR]

Investors are currently obliged to take environment, social, and governance (ESG) issues into consideration as part of their fiduciary duty. As such, it becomes increasingly important to identify sustainable investments that also hold financial value. A sector where this is especially underdeveloped is real estate. This has a lot to do with the obfuscated conceptualization of ESG. The article identifies key gaps in the literature and practice and provides a framework to further the understanding of how ESG factors can add societal and financial value in the real estate sector. A key premise of the article is that the user in the building is grossly overlooked. Drawing on insights from behavioral social science and environmental psychology, the paper explains the role of the user in improving buildings' ESG, also taking into account the investment value. To conclude, the article makes the case that the transition to user-centered smart real estate is the solution to improving both the environmental (E) and social (S) sustainability of buildings, as well as their investment value. Therefore, practitioners and academics are encouraged to critically evaluate and contextualize the ESG framework they are using as well as the extent to which users are considered and smart technology is employed. [ABSTRACT FROM AUTHOR]